Gold prices rise for third consecutive session amid softer US economic data

Gold prices advanced for a third consecutive session on Tuesday as expectations of a US interest rate hike in the coming months weakened, while investors turned their attention to the minutes of the Federal Reserve’s latest policy meeting for indications about the future direction of monetary policy.

Spot gold gained 0.2% to $4,424.28 per ounce by 0130 GMT. US gold futures for December delivery also increased 0.2%, reaching $4,480.90 per ounce.

The precious metal has received support from growing expectations that the US Federal Reserve may maintain its current interest-rate stance following a series of weaker-than-expected economic indicators.

The US dollar remained close to multi-month lows against a basket of major currencies, providing additional support to gold and other dollar-denominated commodities. A weaker greenback generally makes gold more affordable for buyers holding other currencies, potentially boosting demand in international markets.

IG market analyst Tony Sycamore said gold’s recent advance was being supported by softer US economic data released last week. The data has strengthened expectations that the Federal Reserve could leave borrowing costs unchanged rather than move towards another rate increase.

Gold typically benefits from lower interest rates because the metal does not generate interest or dividends. When yields on interest-bearing assets decline, the opportunity cost of holding bullion becomes comparatively lower, making gold more attractive to investors.

According to a recent Reuters poll of economists, most analysts expect the US central bank to keep its benchmark interest rate unchanged at its next meeting and maintain the rate through the end of the year.

Market expectations have also shifted significantly. The probability of a quarter-point rate increase in September has fallen sharply, with traders now assigning nearly a 65% probability that the Federal Reserve will keep rates unchanged. The change followed unexpected job losses in July, softer-than-anticipated consumer price inflation and weaker retail sales data.

Investors are now closely watching the release of the Federal Reserve’s meeting minutes, scheduled for Wednesday. The minutes could provide further insight into policymakers’ views on inflation, employment and the timing of any potential future rate adjustments.

Geopolitical developments are also contributing to demand for gold as a traditional safe-haven asset. Sycamore said bullion appeared to be regaining some of its safe-haven appeal despite higher bond yields, particularly amid renewed tensions surrounding Iran and the United States.

A senior Iranian official told Reuters that Tehran would move towards a “fully offensive” military posture after efforts to negotiate a permanent end to the conflict with Washington stalled. The development came as the United States ruled out extending a temporary ceasefire arrangement, adding to uncertainty in financial markets.

Higher geopolitical risks can encourage investors to increase exposure to traditionally defensive assets such as gold, particularly when uncertainty surrounding economic and monetary policy is already elevated.

Other precious metals also recorded mixed movements during Tuesday’s session. Spot silver climbed 0.9% to $66.40 per ounce, extending gains in the broader precious-metals market.

Platinum edged 0.2% higher to $1,772.75 per ounce, while palladium moved in the opposite direction, declining 0.3% to $1,330.05 per ounce.